A significant financial shift is underway in South Korea. Recent data reveals a substantial movement of funds from traditional bank savings into riskier assets like cryptocurrencies and US stocks. This trend, driven by the pursuit of higher returns, is particularly notable among investors in their 50s and 60s who are using their retirement savings to participate in these markets.
Bank Deposit Balances Hit Lowest Level Since January
According to financial sector data, the combined balance of demand deposits—often referred to as "waiting funds"—at South Korea's five major commercial banks plummeted to 592.669 trillion won by the end of November. This represents a decrease of over 5 trillion won from the previous month and a staggering 26.9477 trillion won drop since June, marking the lowest level seen since January of this year.
This exodus of capital from bank deposits is largely attributed to the surging performance of both the cryptocurrency market and US equities. Market observers have dubbed this rally the "Trump行情" (Trump行情), referencing its acceleration following the former US president's electoral victory. The bullish sentiment has encouraged investors to seek yields beyond traditional safe-haven assets.
The Crypto Rally Fueling the Movement
The crypto market's impressive performance has been a primary catalyst. In November alone, Bitcoin's price surged approximately 40%, breaking past the $95,000 mark. This bullish momentum wasn't confined to Bitcoin; it also ignited a robust altcoin season.
Notably, assets like XRP experienced explosive growth, rallying over 400% in the weeks following the US election. Traditionally, altcoins take longer to respond to Bitcoin's bullish trends, but this cycle has been characterized by a dramatically shortened lag time. A representative from a local cryptocurrency exchange noted that the market dynamics this time are unique, with altcoins reacting almost in tandem with Bitcoin.
Furthermore, the recent delay in implementing cryptocurrency taxation in South Korea has heightened investor optimism about potential future returns, adding more fuel to the fire.
One investor, a woman in her 50s surnamed Kim, shared her motivation: "The cryptocurrency market is so hot right now. I feel this is another opportunity arriving. I don't want to become a 'sudden-poor' again—someone left behind by rapidly rising asset prices."
Retirees Diversify with Crypto and Stocks
A fascinating aspect of this trend is the demographic leading the charge: older Koreans. Individuals in their 50s and 60s are increasingly allocating portions of their retirement savings to cryptocurrencies and US stocks. Many are inspired by viral success stories from the 2021 bull market, where significant crypto gains enabled some to retire early or purchase property.
Online forums and communities are once again abuzz with tales of employees from major corporations resigning after earning billions of won through crypto investments. This is encouraging a new wave of older, first-time investors.
A 58-year-old investor, also surnamed Kim, explained her cautious approach: "I tried investing in Bitcoin and Dogecoin because I felt it was a waste to just let my retirement savings sit in a bank account." Wary of the market's volatility, she started with a small amount and plans to utilize a dollar-cost averaging strategy to mitigate risk.
Data Confirms the Growing Senior Investor Base
Hard data substantiates this anecdotal evidence. According to information obtained by South Korean lawmaker Ahn Do-geol from the Financial Supervisory Service (FSS), the number of user accounts held by individuals aged 60 and above on the two largest domestic exchanges, Upbit and Bithumb, reached 775,718 by the end of September.
The total value of cryptocurrencies held in these accounts was a substantial 6.76 trillion won (approximately $4.8 billion). This age group boasts the highest average investment per person at about 8.72 million won ($6,213), compared to younger demographics:
- 20s and below: 980,000 won ($698)
- 30s: 2.98 million won ($2,123)
- 40s: 5.26 million won ($3,748)
- 50s: 7.72 million won ($5,501)
The growth trend among new senior investors is striking. Since the end of 2021, the number of accounts held by those over 60 on Upbit and Bithumb has surged by 30.4%, adding over 180,000 new accounts. The number of accounts in the 50s age bracket also grew by 22.5% in the same period. In contrast, accounts held by people in their 20s decreased by 6.4%, while those in their 30s saw a modest 8.3% increase.
Looking Ahead: A Sustained Shift?
A banking industry insider confirmed that the movement of funds from banks to crypto and US stock markets is a tangible phenomenon. They further predicted that this trend could accelerate if interest rates are lowered, making safe assets like savings accounts even less attractive compared to the potential returns from risk assets.
For those looking to understand the tools available for navigating these dynamic markets, it's crucial to stay informed. You can explore advanced market analysis platforms to track these trends in real-time.
This large-scale migration of capital signals a broader change in investment philosophy among South Koreans, particularly older generations who are increasingly willing to embrace volatility for the chance of a more comfortable retirement.
Frequently Asked Questions
Why are South Korean bank deposits decreasing?
Funds are flowing out of bank savings accounts because investors are seeking higher returns in other asset classes. The current rally in cryptocurrency and US stock markets has made these risk assets more attractive than the low interest rates offered on traditional bank deposits.
What is the "Trump行情" (Trump行情)?
It's a term used in South Korean media to describe the bullish market sentiment and rally in risk assets like crypto and US stocks following the election of former US President Donald Trump. Investors anticipate that his policies could be favorable for these markets.
Are older people really investing in cryptocurrency?
Yes, data shows that South Koreans in their 50s and 60s are the fastest-growing demographic entering the crypto market. They hold the highest average investment value, often using portions of their retirement savings to invest, albeit frequently with a cautious, long-term approach.
What is a "sudden-poor" or "벼락거지"?
This term refers to individuals who become relatively poorer because they were left behind by a rapid surge in asset prices, such as in real estate or cryptocurrencies. The fear of missing out on another potential boom is a key driver for new investors.
How are senior investors managing the risk of crypto?
Many new older investors are aware of the volatility and are starting with small amounts. Strategies like dollar-cost averaging (investing a fixed amount regularly) are popular to mitigate the risk of investing a large sum at a market peak.
Is this trend expected to continue?
Banking insiders believe the shift of funds from savings to risk assets could continue, especially if central banks lower interest rates further. The performance of crypto and stock markets will remain the primary factor influencing this trend.